Filing status/credits

[Guest]

If a child is the qualifying child of more than one person, only one of those persons can claim the child as a qualifying child for H of H, the child and dependent care expense, and the EIC. No other person can cliam any of these 3 tax benefits unless there is a different qualifying child.

Can the EIC and Child tax credit be split?

If two unmarried people live with 2 children (both biological) together - Dad earns $40,000 - could file single, the 2 children as dependents and child tax credit.

Mom makes $8,000 - could file single and EIC.

There are no child and dependent care expenses.

[Koss]

Division of Benefits

IRS seems to be saying no, except when the parents are divorced or separated and execute Form 8332.

I don't think there is any basis for this position in the text of the law.

Burton M. Koss

https://www.usakoss.net

koss@usakoss.net

[Jesse]

Each take one

I have a similar situation - two unmarried parents - two kids - Mom earned 12,000 and dad earned 28,000. I can't split the credits, but I can split the kids?

Mom files single w/ one child as a dependent, child tax credit and EIC(No child and dependent care expense).

Dad files single w/ one child as a dependent, child tax credit and EIC and child and dependent credit.



Or would either Mom or Dad have to take both children for all benefits.

[Bill Tubbs]

Splitting kids

I have a similar situation - two unmarried parents - two kids - Mom earned 12,000 and dad earned 28,000. I can't split the credits, but I can split the kids?

Mom files single w/ one child as a dependent, child tax credit and EIC(No child and dependent care expense).

Dad files single w/ one child as a dependent, child tax credit and EIC and child and dependent credit.

Yes, you can split the kids like this.

Bill

[Unregistered]

Seems like splitting the children would be no different then splitting the credits.

[Koss]

Splitting the kids

Seems like splitting the children would be no different then splitting the credits.

In some cases, the outcome may be the same. But the mechanism is very different. I still think the IRS has seriously misinterpreted the new law. But assuming that they are right, you can split the kids up, but you can't split the benefits of a single child unless Form 8332 is applicable.

The IRS basically doesn't want one kid's SSN on more than one return.

Married couples with multiple children have been allowed to split up the kids if they choose to file separately, and this hasn't changed. Here in Ohio, MFS often works better, for some very strange reasons associated with state tax rates, particularly if husband and wife make about the same amount of money. We split kids up all the time.

This rule isn't really any different for an unmarried couple living together, assuming that all the children are actually birth children of both taxpayers. The only difference with an unmarried couple is the filing status. In some cases, both are single. In most cases, one has significanly higher income, and rightfully deserves HoH filing status.

Burton M. Koss
koss@usakoss.net

https://www.usakoss.net

[Koss]

splitting benefits

What the new rule prevents is a mechanism that was quite popular among middle income unmarried couples.

Typically the guy makes around $35K, just enough to price him out of EIC. She makes somewhere between $10K and $20K. If they have two kids, the results were astounding in prior years, when you could give him HoH, the dependent exemptions, and the Child Tax Credit, and still give her EIC.

Even if the kids were not his, in prior years, he could take the position that they were his foster children, because they lived in his home all year and he cared for them as his own. This would get him HoH and the exemptions, but not Child Tax Credit.

All that's history. Foster child is only by placement by agency or court. If they're not his kids, he might still get the dependent exemptions if she has no income, but that's my very agressive interpretation of the new law. Most say he gets nothing. I concede that the new law deprives him of HoH if they are not his kids.

If both partners are the biological parents of both kids, you can no longer give her EIC and give him a dependent exemption for the same child.

Although I don't really see the "all or nothing" principle in the text of the law, I concede that it makes sense to a certain degree. It didn't really make sense in prior years that the same child was providing a massive refundable credit to a taxpayer with AGI of $13K, who would not benefit from the lower tax rates of HoH or the reduction in taxable income associated with another dependent exemption, while the very same child was providing the HoH and dependent benefits to someone with a much higher income, who would never be eligible for a refundable credit like EIC...

Burton

[Jesse]

Thanks Burton

I would like to go back to the rule of the EIC going to the person in the household with the highest AGI - no tie breaker rule - just this is the way it is. Clients from last year, as you said, received "massive" refunds are receiving less this year, but I can't feel sorry for them, because they are still receiving a hefty refund.

Last year between the two my family received a $9,000 dollar refund, this year it will be $6,500 - after figuring the return 4 different ways - it is still something to be thankful for, but they don't see it that way.